In The Market

Reebok Aims for Growth

Matt O’Toole discusses digital efforts and blending sport with style.

With a new team, new offices and a fully redesigned digital strategy, Reebok is ready to open the aperture.

That’s the message from brand president Matt O’Toole. And by continuing to focus on the intersection of fitness and everyday style, he says, Reebok has a road map to capturing even more share.

“The traditional thinking in sport was [there was] stuff you make for sport, stuff you make for the gym, and stuff you go out in at night to look cool. And that whole model is not the way the consumer is living,” O’Toole said. “The consumer is saying, it’s all one thing to me, I’m seamlessly moving from the gym to the rest of my life. That’s really what we see as the opportunity for the Reebok brand: bringing the healthy lifestyle business and our heritage together with what’s new and what’s next for the fitness world.”

Adidas Group CEO Kasper Rørsted affirmed that growth was the Adidas Group’s no. 1 priority for Reebok in the Q1 call with analysts in May.

“Despite the fact that we made a lot of progress on Reebok profitability and announced a profitable Reebok for 2018, we still need to drive growth back into Reebok: That is the ultimate target we have set for 2020,” he said.

In the first quarter, Reebok sales decreased 12 percent, but the brand saw growth in its Classics business and gross margin increases. Rørsted said that in 2018 Reebok had spent more as a percentage of sales than its parent brand, and confirmed that it would again in 2019.

Market watchers said the brand was well-positioned to capitalize on today’s fashion trends — but cautioned that the fitness space has challenges.

NPD analyst Matt Powell noted that Reebok’s growth, at 9 percent last year, outpaced the industry. And while the marketshare is small — the brand has less than 1 percent marketshare, per NPD — the consumer is actively looking for less-distributed brands.

“They’re on the right track on Classics, and we’re very much in a Classics mode right now,” he said. “There’s no sign retro is slowing up, and the consumer has shifted away from big brands to smaller ones.”

The struggle, he said, will be in shoppers attitude toward fitness products.

“The consumer today is focused on health and wellness, but they’re not as serious as they were, and they’re not buying activity specific footwear: they’re looking for a general shoe to wear,” he said.

But O’Toole said Reebok has a clear path forward on product, and after establishing its bona fides in performance, the brand can fill in its product line.

“What we purposefully did in the beginning was say, we’ve got to lay down our credentials in fitness,” he said. “Our job now is to backfill under that to make it more accessible and use our history and some of our iconic models as some of that storytelling.”

The Reebok x Victoria Beckham collection offers unisex streetwear looks.

A critical element will be continuing to expand and grow the brand’s partnerships, like the ones with rapper Cardi B and model Gigi Hadid or ones such as its partnership with Crossfit. In July, Reebok announced that it was making Pyer Moss’ Kerby Jean-Raymond the artistic director of a new collection of collaborations called Reebok Studies___. The same month, the second collection of sportswear and sneakers from Victoria Beckham dropped.

“I think one of the things we’ve done well, whether it’s athletic talent or celebrities or some of the fitness partners we’ve identified, is we have a good antenna for what’s coming: Crossfit was very small when we started, and I think Pyer Moss is a good example — this is a guy who’s definitely going to be huge,” O’Toole said. “We think it’s part of this challenger mentality that we have.”

The collaborations are unique vehicles for advancing the brand’s fitness/style blend, he said.

“We have to find those right connective points,” he said, highlighting the crossover appeal of collections like Beckham’s that marry performance and high style. “We want to keep pushing the worlds together as opposed to separate them, and to do it in a fresh and disruptive way.”

Leading the charge is a number of new hires across the C-suite. Nike veteran Karen Reuther was named Global Creative Director a year ago, and Matt Blonder, formerly of Barnes and Noble, was promoted this spring to replace departing Melanie Boulden and took the title of global head of marketing, brand management and digital.

Under Blonder, the brand unveiled a fully revamped website in March. With a cleaner, less aggressive design and a beefed-up back-end architecture to let the site run much faster, the new site is made to be frictionless to shop on desktop and mobile. At the same time, Reebok launched its revamped loyalty program, now called “Reebok Unlocked,” that focuses on experiences and access (to limited edition product, training programs, and concert or fitness events) over discounts.

“We have the opportunity to curate the consumer’s journey and understand what they’re interested in and present that part of the brand,” O’Toole said. “It’s not the traditional idea where you earn so many points and get a discount; It’s more that there’s other experiences you can get with the points you that unlock other parts of the brand.”

With younger shoppers being increasingly driven by experiences, he says, finding new ways to connect will be critical to the brand’s growth plans.

“The real challenge that’s come to everybody in our space is you’ve got to be authentic — you’ve got to be telling real stories that connect to what your consumer cares about, and they’re going to sniff it out if it’s BS,” he said. “To me, there’s always going to be trade issues or currency issues, brick-and-mortar is tough, but I think for every negative there’s a positive. The overall state of the industry, I believe, is healthy and it’s a race now to figure out who can really capture the attention of the consumer.”

View the full print issue here.

Get your insight early.

Sign up for Sports Insights' mailing list to get our publication delivered to your inbox bi-monthly, as well as our newsletter for more frequent updates.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.